Unlike the years 2020-21, 2022 has not been kind to the US stock market investors. Stock prices kept melting all through the year against the backdrop of the Fed’s unprecedented rate hikes which ultimately puts pressure on the corporate balance sheet and earnings. What’s in store in 2023 remains to be seen, but investors need to be nimble-footed to take advantage of any positive indications. In an exclusive interview with Financial Express Online, Viram Shah, Co-founder & CEO of Vested Finance shares his views on the outlook for the US stock market in 2023 and the importance of diversification of one’s investment portfolio with global stocks.
What is your outlook for US equities in 2023?
It is difficult to predict the performance of US equities in 2023, as the markets are unpredictable and can be influenced by a variety of factors. However, many analysts have suggested that US equities could continue to do well over the next few years as economic conditions improve, and the US government and the Fed continue to intervene to provide overall stability in the economy.
The present situation, in which the Fed is wary of inflation and is taking action to contain inflation, as well as the Fed’s recent comments on being less aggressive with rate hikes as it would affect the economy, are all factors that investors find encouraging.
To sum it up, investors need to stay calm and stick to investment basics. They need to understand that 2022 was a volatile year, especially when compared to 2021. Market cycles are part of the investment journey, so we must accept this and make sure that we don’t make any hasty decisions. Every downturn provides opportunities to buy great companies at cheaper prices.
Also Read – US Stock Market Performance 2022: Outlook for 2023 and top stocks to invest next year
How important are US Fed policies, especially related to interest rates, for investors to keep an eye on?
US Fed policies, especially related to interest rates, are extremely important for investors to keep an eye on. Changes in interest rates can have a considerable impact on the stock market, bond market, currency markets, and other economies such as India and China. The main reasons are (i) all economies are interdependent, and decoupling in real-time is not that easy after all, and (ii) the US dollar remains a leading currency in international trade.
Interest rate changes can also affect the cost of borrowing money, which can impact businesses and individuals. By monitoring US Fed policies, investors can gain insights into the direction of the economy and make more informed investment decisions.
Also Read: US stock prices fall in December despite the Fed slowing the pace of rate hikes
How to plan investments in the US stock market in 2023?
Investing in equities in 2023 can be a great way to diversify your portfolio and potentially generate long-term returns. As with any investment, it is important to do your research and understand the risks associated with equity investing. You should also be aware of any macroeconomic and political trends that could potentially impact the performance of the stock markets.
Three important things to keep in mind:
1) It is important to have a diversified portfolio and not to put all your eggs in one basket. Geographic diversification is an important piece of diversification that’s missing in the majority of Indian investor’s portfolios,
2) It is important to remember to manage your risk and to review your portfolio regularly to ensure it is still in line with your goals, and
3) If you spend time finding individual companies then look for solid businesses that are able to generate profits without taking on debt or else ETFs are the best option to build one’s portfolio.
